Norway’s wealth fund balks at divesting greenhouse gas emitters

The council has called on the investor to sell 5 unidentified companies that have high levels of emissions

by BLOOMBERG

OSLO • In a direct confrontation with its Ethics Council, Norway’s massive wealth fund rejected a call to divest some of the world’s biggest greenhouse gas emitters, saying it needs more clarity on the rules.

Norges Bank governor Oystein Olsen and his deputy Egil Matsen said the bank’s board had discussed the matter in late October and come to the conclusion not to sell any companies yet.

“This must be seen in the light of there still seem to be differences in how the council on ethics and Norges Bank view how the conduct-based climate criterion should be applied,” they wrote in a letter to the Finance Ministry. “The executive board resolved instead to ask the Ministry of Finance for more detailed clarification of certain aspects of the application of the climate criterion.”

The central bank disagrees with the council’s view that neither quota trading systems nor other emissions regulation mechanisms should play a role in deciding whether a company should be excluded by the fund.

The letter is the latest in a back-and-forth with the council, which has called on the investor to sell five unidentified companies that have high levels of emissions. At issue is what constitutes an “unacceptable” level of greenhouse gas emissions. The council has said that the best approach is to look at overall emissions.

The central bank now wants the ministry to clarify whether the primary assessment in the climate criterion is intended to be companies’ emissions. The bank argues that the criterion requires assessment of more company-specific acts and omissions in relation to greenhouse gas emissions beyond just excluding the highest emitters.

Overseen by the Parliament, the fund had up until the end of 2017 excluded or put under observation 152 companies based on its ethical guidelines, with coal miners or coal-power producers making up the largest group. It also refrains from investing in tobacco producers and some weapons production, and monitors corruption risk and human rights.

The rule that was introduced in 2016 to limit investments in companies that release greenhouse gases to an “unacceptable degree” has yet to be applied, largely because it’s considered unclear. — Bloomberg